The home video and pay-TV market totalled $251.5 billion in 2016, up by 3% year-on-year, with pay-TV accounting for 86% of global video entertainment spend, says researcher Futuresource Consulting.
The report looked at consumer expenditure across digital video (SVOD, TVOD, EST and pay-TV VOD), packaged video (DVD and Blu-ray) and the pay-TV market, and determined that the pay-TV share of the market will remain stable as growth is in line with spending on both physical and digital home video.
It found that, overall, video entertainment spend is set to rise to $280 billion by 2020, with a CAGR of 3%. Subscription video-on-demand (SVOD) was the standout performer of 2016, and momentum is expected to continue well past 2020. Globally, the firm expected the market to reach 236 million global subscriptions at the end of 2016 — and this is projected to almost double to 485 million by 2020.
However, Netflix’s dominance in the sector is now facing a significant challenge from Amazon, with this space also being targeted by global entertainment companies including content producers, hardware manufacturers and telcos who are attracted by the significant revenues.
Global packaged video spend is in decline, with the deficit not being made up by transactional digital. Annual spend across DVD and Blu-ray fell by 13% to $21.6 billion in 2015 and is expected to fall to $9.1 billion by 2020. For 2016, an exceptionally strong late 2015 theatrical slate converted well to home video unit sell-through, the market also received a minor boost from the introduction of an even more premium tier of Blu-ray, Ultra HD. However, the global rate of decline in dollar terms increased to 17% due to fluctuations in the exchange rate.
Following growth of 30%, digital video spend in 2016 reached $22 billion and exceeded that of physical which fell to $18 billion. The Futuresource report also noted some concerns over the softness within the transactional digital video market with both rental and buy-to-keep currently under-performing.